Margin!
Recently a Twitter acquaintance pointed me to this article:
Her emphasis in citing the story was on the radical design — black cribs — that BabyAge came up with as a result of its new focus on listening better to customers. And why not? Black cribs are certainly counterintuitive, and I figure it’s always a good thing when any company listens to its customers / users / audience more closely.
But the pet topic that jumped out at me from this story was . . . MARGIN.
The other day I talked about the ways that smart companies are growing their profits even when they can’t grow the top line. And past reporting I’ve done suggests to me that many companies — especially in their sales and marketing departments — have wide-open opportunities for growth that arise from the pursuit of higher margins rather than higher revenues above all.
Here’s a key section from the story on BabyAge:
Keifer said he’s seen some softness in his company’s high-end brands since the current recession hit — something that did not happen after 9/11 or when the dot-com bubble burst.
This helped Keifer realize that while top-line sales are great, a company cannot survive without margins. Especially in a time when consumers are on the Web looking for the best deals.
. . .
“We’ve gone overboard to make sure everyone in our company understands what margin is, and in the last two months, our margin has gone up 10%,” Keifer said. “It really took this recession for us to get everyone from the warehouse down to the call center to understand that we’re not in the business for top-line, but for margin.”
Hey, I love me some revenues. But margins are what make or break most businesses, in good times and bad.
Now over to you: What are you doing to improve your company’s margins?
~
Photo by westerndave.
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I second that emotion. …the make it up in volume business model has sailed for most of us.
Thanks for the note, Jack!
Third. But how? In the last few months I’ve been working with a friend’s software startup that has a wonderful prototyping tool that actually turns out production code for data collection and operational and management reporting from disparate sources. It took me the better part of a year to convince him that marketing and sales were important. This is NOT an isolated case but mirrors the several instances I’m personally familiar with in the last five years and another friends experience across several small companies. M&S are too often left to their own devices, i.e. run on internal functional agendii by specialists, don’t talk to each other and not organically linked into the broader business and its value propositions. This is a near universal yet when one attempts to raise margins improving the business content and operational execution as parts of the whole enterprise is the first and easiest step to wider performance improvement.
Thanks for the comment, Dave.
You raise a broader point — one of my pet topics: EVERYTHING can be thought of strategically. H.R. can be strategic. P.R. can be strategic. All of it.
The fact that many companies continue to miss this perplexes me.
True and true but let’s not go that far but stick to an intermediate level. It seems to me the first problem is functional/departmental specialization where decisions are made mostly on narrow criteria. This trade show vs that – not whether trade shows are valuable let alone how we make them constructive for, say, sales. In this case what is the fundamental business value proposition then how to translate that into messages then into specific marketing channels. Coupled with what segments and accounts should be targeted and how those marketing programs will make it better. I don’t know many M&S functions that ask those questions and conversely I don’t know many executives that help them or hold them accountable.
Run the test case – what is the purpose of your blogging? How does it fit into Hoover’s overall Mkt strategy and what contribution does it make? What is Hoover’s Mtk strategy – what value does it create, how is that best delivered? Seriously run that exercise in your head and then try it with a few of your colleagues and see what you get!
Good points, Dave. I was in a task-force meeting this morning dedicated to answering key questions about the very linkages you’re talking about. (Maybe we’re a good outlier!)
Very interesting comments, Tim and Dave.
Dave, I’m interested in learning more about your friend’s company and technology. Would you be willing to tell me more? Shoot me a note at peter.ingram (at) blendedbusiness.com.
Thanks for the tip, Tim. I’d love to connect with you to compare notes, too. Up for that?
–Peter